Source: Celebrity sex tapes bankrolling porn industry

That’s the problem facing adult entertainment companies as Internet porn is available for no more than the cost of an online connection. From earning as much as $15 billion a year in the mid-2000s, the industry has shriveled to between $5 and $10 billion today, according to various estimates.

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But one form of adult entertainment consumers will still apparently pay for is the celebrity sex tape. In fact, one adult industry insider tells FOX411 that the celebrity sex tape is basically keeping adult entertainment companies, including industry leader Vivid, afloat.

The source maintains that savvy women like Farrah Abraham, Myla Sinanaji, and Sydney Leathers are giving their 15 minutes of fame to adult companies to make professional pornos for big paydays, and the porn companies are scrambling to find more trashy stars like them to boost their bottom lines.

“Vivid only makes money from celeb tapes. A porn video generates no income. Celebrity tapes sell,” the source told FOX411. “They are finding women celebrities to make sex tapes. It was not a romantic relationship that Farrah had with James Deen. It was set up. (Reality star) Tila Tequila was staged with lighting with her girlfriends in Las Vegas.”

The founder and co-chairman of Vivid Entertainment, Steven Hirsch, acknowledged the landscape of the porn industry has changed, and that D-list celebs now mean big money.

“I think that we’re dealing with several issues. The one that most people talk about is the amount of free content on the Internet and how to deal with that. What we’ve chosen to do is work with free sites. One of the things that we did decide to do is work with celebrity sex tapes,” he said. “What we did is we leased a celebrity sex tape with Farrah Abraham and we took a five minute clip and put it onto one of the three sites. And as a result of that, they had 12 million views of that five-minute clip within the first 10 days. We surrounded that clip with links back to Vivid.com, and then those people came to Vivid.com to watch the movie, which equated to $500,000 in sales.”

But Hirsch would not go so far as to say Vivid relies on celebrity sex tape income to stay afloat.

“The one thing about celebrity sex tapes is they don’t fall into any sort of schedule. Sometimes it’s two or three in a row and then not any for a year. So it depends if we’re able to find some or not,” he said. “This year we’ve been lucky with Farrah and Sydney. Ultimately they are not a huge part of our business, but it’s what helps to drive our brand, and gets the name out there, and drives traffic to all of the Vivid properties.”

He does, however, acknowledge pursuing young women in the news. “Absolutely. Yes, yes, yes. We’re very proactive,” Hirsch said. “If we see something in the news we try to contact them or make them some sort of public offer.”

Our sources say this pursuit is a huge change in how the industry works. Where companies like Vivid once waited for a homemade sex tape to be leaked to them – a la Pamela Anderson and Tommy Lee’s tape in 1995 – nowadays, the company prefers to make them happen themselves.

Sydney Leathers, New York mayoral candidate Anthony Weiner’s former sexting partner, was lured by the money and fame that a celebrity sex tape brings. In an early interview with FOX411, she said she had rejected an offer to make a sex tape with Vivid. But less than a week later, the 23-year-old did indeed shoot a porno with a porn pro for Vivid, for a large, undisclosed sum of money.

According to Leathers, her change of heart happened because: “Everyone already thought I did it, so why not?”

Jasmine Waltz is a model and actress who has appeared in the films "Demon" and "Poker Run." Waltz made a private sex tape with her ex-boyfriend, and told a tale of how Vivid not only wanted her to sign off on her personal tape, but make another one under the company’s direction.

“It was something that was made already (with her ex-boyfriend). I definitely sort of had forgotten that it had been made. After some things have happened in my life, I was approached by Vivid … where they wanted to do a deal where they pick a porn star, or whoever I pick, and they would film the whole thing,” she said. “I turned that down, and then it must have been like seven or eight months later that Exquisite Films had gotten an email from whoever had gotten the tape (with the ex boyfriend). (They said) we can’t do this without your consent, we’ll pay you X-amount of dollars, and they’ll edit it. I didn’t think there was [anything] too raunchy about it. I didn’t want a porn company filming something under their control.”

Waltz also explained that her tape did not make a big splash because she signed with Exquisite instead of Vivid. “Because Vivid and TMZ have such a strong bond together, it was thrown under the rug. I just know the two owners are very tight.” Waltz said. “The minute something like that happens they call them and have them break all of the news. It’s a very hot news story, so for TMZ to give the exclusive, they stay loyal to each other.”

An adult entertainment insider backed up Waltz’s claims, as did Howard Levine, the president of Exile video, a division of Exquisite, which ended up releasing Waltz’s tape.

"When we were putting out the Jasmine Waltz title from Exile Distribution and contacted TMZ to do a piece on it, they refused,” Levine said. “Did it affect her sales because of TMZ? Yes, it did affect sales, but it still did very well."

Hirsch denied the claims Vivid and TMZ had a special relationship.

"That’s nonsense,” he said. “We have the same relationships with all of the sites, including FoxNews.com."

TMZ did not return our emails for comment.

Diana Falzone is a FoxNews.com reporter. You can follow her on Twitter @dianafalzone.